Wealth management platform Endowus increased client assets sevenfold to USD 7bn in the three years through September 2024, promising a user experience that blends digitalization and human touch and easy access to different asset classes.

Access to private markets is an essential component, with Samuel Rhee, chairman and group CIO of the Singapore and Hong Kong-based start-up noting that alternatives exposure has tripled in the last six months alone. He sees it as an endorsement of the democratizing power of open-ended products.

“The growth and pace of growth are accelerating,” Rhee explained. “We’ve worked with all the major GPs to introduce what we prefer, which is semi-liquid evergreen structures for private credit and real assets, including infrastructure and real estate.”

Investors also recently endorsed Endowus, committing another USD 17.5m to take its Series C to USD 52.5m. Existing backers Prosus Ventures, UBS, and MUFG took the lead, while Malaysia’s OSK Ventures and Asia Companion Fund – which is managed by Korea’s The Wells Investment and a vehicle established by basketball player Jeremy Lin – came in as new investors.

The start-up’s positioning as an independent, fee-only wealth advisor was different and deliberate. Drawing on experience with Morgan Stanley Investment Management and UBS, respectively, Rhee and co-founder Gregory Van resolved to take only an all-in fee from clients based on asset value. Commissions and trailing fees from fund managers were ruled out to avoid conflicts of interest.

Seven years in, Endowus serves more than 200,000 individuals, high net wealth individuals (HNWIs) and family offices, corporates, and institutions – including non-profits – through a mobile app. The company claims about 10 of the wealthiest family groups across Indonesia, Singapore, Malaysia, and Hong Kong are clients and shareholders.

A B2B platform is currently under construction for the Singapore market and Endowus expects to expand it to Hong Kong.

Accessing alternatives

Like most wealth management platforms, Endowus started with public markets, but alternatives were always part of the plan. The closed-ended fund route was quickly dismissed on grounds of complexity – investors weren’t ready for a world of capital calls and distributions. Moreover, the challenges of managing multiple funds across vintages and cycles presented potential credit risks.

Evergreen products, which require smaller commitments, take away management complexity, and offer stable returns and opportunities for liquidity, emerged as a good fit. Rhee added that Endowus was better placed to distribute them than private banks, which focus on making sales – even for single-vintage funds – rather than managing products on an ongoing basis.

“GPs realize that they need an ongoing client servicing because they can’t do it themselves. They need a partner who’s going to help educate clients in the right way, work with them, manage them, take care of them, and advise them through their investment journey. They look around and there’s nobody except Endowus who’s doing it,” he said.

When Endowus first approached GPs with its value proposition, it wasn’t an easy sell: the platform was of limited scale. However, client assets doubled to SGD 2bn (USD 1.5bn) over the 12 months through June 2022 and a first private equity tie-up with Partners Group [SWX:PGHN] soon followed.

Having gained traction in Singapore and a successful market entry into Hong Kong, which Rhee describes as “two key markets where 90% of cross-border high net worth assets are concentrated,” more alternatives managers came to recognize the value of Endowus.

Broadening exposure

The platform now has partnerships with the likes of Ares Management [NYSE:ARES], Carlyle [NASDAQ:CG], KKR [NYSE:KKR], Oaktree Capital Management, Hamilton Lane [NASDAQ:HLNE], and UBS Asset Management. It also became the first Asia-based distributor of evergreen products launched by EQT [STO:EQT] and HarbourVest Partners.

Through these relationships, Endowus can bypass local feeder vehicles and go straight into master funds established in the US. This lowers the cost of access and brings exposure to assets not available through Asian products – Rhee cited Cliffwater’s private credit direct lending strategy as an example.

“In the past 12 months, whenever we’ve engaged these guys, they’ve been very much more proactive,” he added. “But Asia is still a very small market. For these guys, it’s still a risk launching new products. They need the demand first, they need the commitment from our side.”

Endowus is working to broaden its alternatives suite, introducing fund-of-funds and hedge fund solutions. Two weeks ago, a more nuanced private credit offering was launched that brings immediate exposure to seven top-tier managers for an upfront minimum commitment of USD 100,000. A multi-manager private equity solution is in the pipeline.

In terms of geographic coverage, Endowus will focus heavily on Hong Kong over the next 12 months, looking to double client assets in the territory. Expansion into other markets is expected to follow, with an emphasis on those with high wealth concentrations, such as Taiwan, South Korea, Japan, and Australia. However, the firm is conscious of the need to navigate local nuances.

“Apart from Singapore and Hong Kong, where we have gone alone, other markets require a lot of localization,” said Rhee. “There’s also legal and ownership issues. For example, you can’t have a majority ownership in a financial company in Southeast Asia. It would make sense for us to enter those markets with a very strong local partner.”